Audi calls for import duty cuts on electric vehicles in India

When asked how much import duty should be reduced, Dhillon said that a number close to 40% should boost the segment.

By:September 23, 2021 10:01 AM

After Tesla and Hyundai India, now Audi India has called for an import duty cut on electric vehicles (EVs). “While the Centre has taken some steps for making EVs popular—it has reduced GST on all EVs from 12% to 5% and then there are income tax benefits for buyers—the import duty is still in the range of 60-100%,” Balbir Singh Dhillon, head of Audi India, told FE.

“I always request the government to give a window of 3-5 years of lower import duties (for EVs), till such time sales pick up for carmakers to justify manufacturing such cars in India,” said Dhillon.

When asked how much import duty should be reduced, Dhillon said that a number close to 40% should boost the segment.

On Wednesday, Audi India launched two electric cars: the e-tron GT and the RS e-tron GT, priced at Rs 1.79 crore and Rs 2.04 crore, respectively (ex-showroom). In July, it had launched the e-tron 50 (Rs 99.99 lakh), the e-tron 55 (Rs 1.16 crore) and the e-tron Sportback 55 (`1.17 crore). All these five electric cars are CBU imports.

“There are four things that contribute to the price of such cars: cost of manufacturing, import duty, GST, and registration/road tax etc,” said Dhillon. “Of these, the cost of manufacturing is in our control, because we get the benefit of our global supply chain. The other three are in the hands of the government, of which two have been taken care of, i.e., GST for EVs is now just 5% as compared to 48-50% for petrol/diesel cars, and some states have 0% registration, but extremely high import duty means the end-cost for the customer doesn’t reduce much.”

While Audi India is mulling local manufacturing of EVs, Dhillon said it has to reach certain volumes for the global headquarters to justify the cost of setting up local assembly (for EVs). “We need to sell many thousand cars to arrive at that decision; lower import duties can help us reach that sales number faster and speed up local manufacturing initiatives.”

In July, Tesla CEO Elon Musk had said the company may set up a manufacturing unit in India if it first succeeds with imported vehicles in the country. Interacting with followers on Twitter, Musk noted that at present import duties in India are ‘the highest in the world’ and hopes for ‘at least a temporary tariff relief for electric vehicles.’

Hyundai India then backed Tesla, with MD & CEO SS Kim adding that any reduction in taxes on imported EVs will be a huge welcome as it will help automakers generate needed volumes and reach viable scale.

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